Corporate and Commercial Law Management Pty Ltd.

Question: Discuss about the Corporate and Commercial Law for Management Pty Ltd. Answer: Introduction In order to maintain the rules and regulations of a country as well as for performing activities within the country the country usually has some certain law that govern the citizens of the country. In order to perform business activities within a country the business or corporate laws of that specific country must be abide by the corporate as with these corporate laws the business of the country governs. In Australia, there is Corporation Act 2001 and this Act is designed to govern the industry sector of Australia. The corporation Act is an important Act of the Commonwealth of Australia deal with the business entities of Australia at federal level as well as interstate level (Harris, 2013). All the laws related to the business organization and the business activities use to govern by this Corporation Act 2001 in Australia. The corporate Act enforces numerous additional fiduciary duties for the directors and controllers of the business organizations, which are incorporated under the l egislation or Act of Corporation Act 2001. As per the corporation Act 2001 (Cth), Division 3 section 197 the directors possess certain power in the organization and at the same time they have to perform some duties and responsibilities on behalf of the organization and they are liable to meet certain standards in order to deliver their performance (McQueen, 2009). Moreover, they are liable to the stakeholders of the organization and the investors can sue them for their deteriorating or substandard performance as per the law on breach of duty of care, skill and diligence. Main Context Corporations Act 2001 The corporations act states number of additional duties on the directors of a company. The officers of a company should comply with corporations act to carry their duties. According to the corporations act, officers are required to: Act in a proper manner and in good faith Act with diligence and care Avoid inappropriate use of the information Avoid inappropriate use of the position Disclosing certain interest Corporations Act section 180 provides civil obligations that an officer or a director should exercise a degree of diligence and care in the discharge of the duties and in exercise of the powers (Symon, 2006). The requirement for an officer or a director is to apply a reasonable a degree of diligence or care would be satisfied where they: Make an appropriate judgment for an appropriate purpose and in good faith. Do not take decision to fulfill their personal interest Take decisions and judgment for the development of the organization It is very important for the officers to satisfy the required levels of diligence, skills and duty of care. They should take an active step in the development of the company and understanding the rules and policies appropriately (Mallett, Kendall and Boyd, 2007). The section of 181 of corporation act states that officers and directors should discharge their duties and power in best interest of the company, in good faith and for an appropriate purpose. The section of 184 (1) of corporation act states that a breach of duty would be consider as a criminal breach if the director or officer behave in a reckless manner. The section 183 of corporation act states that the officers of a company must not use the information for personal benefit. The section 182 of corporation act provides civil obligation that forbid an officer or director from making an improper use of their positions to gain a benefit. Therefore, if an officer breaches his duty then it would be considered as criminal offence (Australian corporations legislation, 2010). The corporation act 2001 states breach of the statutory duties can lead to penalties under the act that ranges up to $200,000. The act states that an officer of a company is liable personally for the breach of the duty of care, diligence and skills. Therefore, officers are required to act for an appropriate purpose and in good faith, act with diligence and care, avoid inappropriate use of the information and position and disclosure of the interest (Homburg, 2008). Relevant case According to the Corporation Act 2001 Section 197 the directors of an organization are liable for the debts as well as the other obligations, which are incurred by the organization as a trustee of that organization (Mitchell, 2011). As per the law a director of a company is liable to discharge the entire or part of the liability incurred by the company in case of the company has not fulfill the liabilities or cannot fulfill the liabilities or unable to fulfill part of the liabilities of the company. In case of the company is not entitled to be completely covered against the liability incurred by the company, out of the trust asset exclusively as the violation of trust by the company, the company performing exterior to the scope of the power of the directors in the company. In case of deny by the trust or restricting the corporation right to be covered against the liability is also not entitled to be completely indemnified against the liability out of the trust assets. The directors a re usually liable individually as well as jointly with the company (Symon, 2006). The directors do not have any liability under the subsection (1) in case of the director entitled to be completely indemnified by the other directors of the company. Corporate Debacle The Trio Group collapsed which was the largest superannuation scam in the Australian history. Approximately $176 million of investment funds of Australians either missing or lost. Due to this collapse, more than 55,000 investors were affected. The government of Australia provided compensation to investors of about $55 million who had invested in the group. The Australian securities and investment commission and Australian prudential regulation authority took actions against the people and officers involved with the group which include former and current directors, financial advisors and auditors (Washington, 2010). The actions taken by the government included prison sentences of three years, suspension of the Registrable superannuation entity license, enforceable undertakings ad cessation or cancellation of the Australian financial services licenses. In the late 2003, the collapse of the group commenced when the write global asset management Pty ltd purchased funds management busines s in the Albury, New South Wales. The directors of the Write Global were Mr Matthew Littauer, Mr Cameron Anderson and Mr Shawn Richard. They became the directors of the Tolhurst Funds Management Pty Ltd. The director Mr Richard became the main figure of Trio Group for the collapse. The following directors changed large number of companies such as Tolhurst Funds Management Pty Ltd was renamed as Astarra Funds Management Pty Ltd and a subsidiary of the Astarra Funds Management was reamed as Trio Capital Limited. The RSE license was held by Trio issued by the APRA (Watson, Gleeson and Higgins, 2013). The company was the trustee of Apra superannuation funds and a superannuation trust. The Trio was responsible of 29 managed investment schemes. Therefore, the officers of the group are liable for the breach of the duty of care, diligence and skill. Examining the law on breach of duty of care, skill and diligence The examination of the role of the directors on the basis of duty of care, skill and diligence is dependent on the management of the corporation. In general terms the board is responsible for the provision of the strategic planning and thereby the strategic planning helps in the creation of the appropriate corporation with providing the knowledge about the business and the financial affairs of the corporation. In discharging the mandate to manage the corporate affairs, the board must comply on the objects of the corporation of the laws as stated by the patent letters and the articles of the incorporation (CASSEL, 2016). The creation of the examination of the breaching of the law helps in the creation of the interests of the shareholders with the creation of the interest and the shareholders that are helpful for the creation of focus on the role of the directors with the creation of the incorporation and the henceforth helps in the creation of the establishment of the rules. The direc tors help in the creation of the power with the creation of the competence and the diligence helps in the creation of the best interests and thereby the corporation is seemed to be enhanced with the creation of the fiduciary duty. The fiduciary duty is enacted because the obligation of the governing bodies with the creation of the appropriate legislation boundaries and the standard of the care (Cope, 2006). It henceforth enhances the attempt of the combination of the court decisions with the creation of the attempt of the resources and thereby the legislations are seemed to be under the content of the non-corporation laws. The trust must be established for the motive of creation of the profit and thereby the corporation organized helps in the creation of the duty of the loyalty. The case provided in this report helps in the establishment of the breaching of the fiduciary acts that are helpful for the enhancement of the case with the establishment of the contracts and the torts. The duty of loyalty with the creation of the direction helps in the creation of the honesty and the faith with the creation of the implications that are seemed to be avoiding all the situations and also the general bounding helps in the creation of the conflicts in the interest (Griffith, 2008). The Duty of the skill helps in carrying out the obligations made in the non-profit corporations with the achievement of the degree of the skills and also helps in the creation of the common law known as the substantive law. Under the common corporation Act under the provincial incorporation helps in the creation of the statutes with the construction of the standards thereby it also helps in the construction of the standard of the care in the form of the higher skills with the creation of the abilities in order to make the stand reforms (Yip, 2015). The reasonable limitation must be focused for the enhancement of the decisions overseeing the materials of the corporation. The advice of the professionals must be considered with the clarification of the aspects of the operation of the corporation and also helps in the certifying certain limitations with supervising the roles of the senior management. The Duty of diligence provides the appropriate management of the initiative taken for attending the meetings also helps in resolving the issues that are identified in all aspects of the organization with keeping in view the enhancements of the organization. Under the acts of the corporation, the requisite particular skill level is determined with acknowledging the knowledge and the skill level. The implications lay in variety of the skill levels and thereby it also helps in the creation of the regular board meetings with informing the knowledge of affecting the corporation. The practical implications provides the requirement of calling he annual meetings with the consideration of the awareness towards the policies and also the management is also seemed to be crucial for the enhancement of the program with the appropriate execution of the information provided about the program (Lowry, 2012). The implementation of the screening protocol helps in the consideration of the addressed issue s with the enhancement of the protocols considered. Conclusion The corporate and commercial law helps in managing the business activities within the specific country or territory. With the corporate law the government or authority control the business activities of a certain constituency as it govern the business communities of that particular constituency. It helps the business organizations to perform their activities by meeting the entire terms of the legislations of the constituency. In Australia, the Corporation Act 2001 is made for governing the business activities within the Commonwealth and Federal constituency (Harris, 2013). As per the Act the directors of the organization or the management authorities who govern the organization have some certain duties and responsibilities along with the power to govern the organizations. Moreover, the directors have to perform some additional duties. According to the corporation Act 2001, the directors should perform their duties with proper manners and in good faith; they should act with diligence and care. Beside this the directors of the organization must avoid improper usage of the position as well as must use the information properly. Apart from this the directors should not disclose certain information, which hinder the development process of an organization. References Australian corporations legislation. (2010). Chatswood, N.S.W.: LexisNexis Butterworths. Homburg, J. (2008).Cornerstone law series. [Adelaide]: Law Society of South Australia. Mallett, J., Kendall, K. and Boyd, B. (2007).ASIC's processes for receiving and referring for investigation statutory reports of suspected breaches of the Corporations Act 2001. Canberra: Australian National Audit Office. Symon, H. (2006).Corporations Act 2001. Melbourne: Leo Cussen Institute. Washington, S. (2010).Trio debacle could cost $180m-plus. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/trio-debacle-could-cost-180mplus-20100518-vc8b.html [Accessed 12 Aug. 2016]. 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The Irreducible Core of the Duty of Care, Skill and Diligence of Company Directors: Australian Securities and Investments Commission v Healey.Mod. L. Rev., 75(2), pp.249-260. Yip, M. (2015). Challenging the role and duty of directors in high profile corporate failures in the USA and Europe in the wake of financial crisis - possible allegations against board of directors for breach of duty of care, skill and diligence?.EuroMed J. of Management, 1(1), p.70.